Top ISPs threaten to innovate less, spend less on network upgrades

AT&T, Comcast, TWC, Verizon join to oppose common carrier rules.

Think you hate your Internet service provider now? Pretty much all the top ISPs in the country just told the Federal Communications Commission that if they face extra regulation, they will stop investing as much as they do today in network upgrades, and they will have to stop being so innovative.

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The threat came today in a letter signed by the chief executives of AT&T, Bright House Networks, Cablevision, CenturyLink, Charter, Comcast, Cox, Frontier, Suddenlink, Time Warner Cable, 15 other companies, and industry groups such as the National Cable & Telecommunications Association, the Telecommunications Industry Association, and the CTIA Wireless Association.

The companies warned the FCC not to classify broadband as a telecommunications service, which would open Internet service up to stricter “common carrier” rules under Title II of the Communications Act. The US has long applied common carrier status to the telephone network, providing justification for universal service obligations that guarantee affordable phone service to all Americans and other rules that promote competition and consumer choice.

Consumer advocates say common carrier status is needed for the FCC to impose strong network neutrality rules on Internet service providers. Such rules would force ISPs to treat all third-party Web services equally, not degrading competing services or speeding up Web services in exchange for payment.

Not surprisingly, that's the last thing ISPs want.

“Today’s regulatory framework helps support nearly 11 million jobs annually in the US and has unleashed over $1.2 trillion of investment in advanced wired and wireless broadband networks, as well as an entirely new apps economy,” the letter said. “We see an average of over $60 billion poured into cable, fiber, fixed and mobile wireless, phone, and satellite broadband networks each and every year. And broadband gets better every year: the average broadband speeds jumped 25 percent in 2013 alone, highlighting there are no 'slow lanes' in today’s Internet.”

"Even the potential threat” of common carrier rules resulted in a 10 percent market cap decrease for “some ISPs” when the FCC considered Title II previously in 2009 and 2010, the ISPs' letter to the FCC claimed. “Today, Title II backers fail to explain where the next hundreds of billions of dollars of risk capital will come from to improve and expand today’s networks under a Title II regime,” the ISPs wrote. “They too soon forget that a decade ago we saw billions newly invested in the latest broadband networks and advancements once the Commission affirmed that Title II does not apply to broadband networks.”

ISPs have continually touted their investment in broadband infrastructure, although Vox pointed to the cable industry's own data today to show that investment has actually decreased.

Nonetheless, the ISPs' letter claimed that only the status quo, aka a “stable regulatory framework,” can “promote future investment, innovation, and consumer choice."

“Under Title II, new service offerings, options, and features would be delayed or altogether foregone. Consumers would face less choice, and a less adaptive and responsive Internet,” they wrote. “An era of differentiation, innovation, and experimentation would be replaced with a series of ‘Government may I?’ requests from American entrepreneurs. That cannot be, and must not become, the US Internet of tomorrow.”

This alarmist warning comes days after AT&T claimed that common carrier rules would basically ruin the whole Internet for US customers. Consumer advocacy groups arguing on behalf of Title II have dismissed these arguments, saying AT&T falsely claimed that the FCC has no discretion in how to deploy common carrier rules. Using Title II would let the FCC ban paid prioritization agreements in which Internet service providers charge Web services for access to faster paths over their networks, proponents of common carrier rules say.

FCC Chairman Tom Wheeler has so far resisted calls to classify broadband as a Title II service, but in the face of widespread protest decided to ask the public to weigh in on whether the FCC should issue common carrier rules on Internet service.